The four peers display reasonably sound financial ratios. Franchises differ across the banks, with Finansbank the largest, controlling a 4.2% deposit share. Product mix varies, with TEB, Denizbank and INGBT still trying to build up a stronger retail presence. All banks have grown rapidly, but loan expansion at Denizbank, under new ownership since 3Q12, has been faster than peers.

Net interest margins (NIM) are higher than the sector average for all four banks; TEB, whose origins lie in corporate lending, has the lowest NIM and Finansbank the highest, reflecting a business mix more focused on retail banking.

Finansbank’s core capital ratios are the strongest among peers. This is crucial since its parent National Bank of Greece (NBG) may not be able to inject additional capital into Finansbank, should this be required. Loss absorption capacity at Finansbank, TEB and INGBT is adequate at current rating levels but weak at Denizbank. Regulatory capital ratios are supported by subordinated debt provided by the four parents. Such amounts are greater at INGBT and Denizbank.

All banks are rated in the ‘BBB’ range. Parental support drives the Long-Term IDRs of Denizbank (whose parent is Sberbank of Russia, BBB/Negative/F3), TEB (BNP Paribas, A+/Stable/F1) and INGBT (ING N.V., A+/Negative/F1+) but not for Finansbank (National Bank of Greece S.A., (NBG) B-/Stable/B). NBG has a weak financial profile and, thus, Finansbank’s IDRs are driven by its own financial strength.

A copy of the report ‘Peer Review: Second-Tier Foreign-Owned Turkish Banks’ is available at www.fitchratings.com.